VUG vs VOO: Side-by-Side ETF Comparison

VUG targets large-cap growth stocks, offering higher return potential with more volatility and lower dividends. VOO tracks the S&P 500, delivering broad market exposure, greater stability, and better income. Choose VUG for aggressive growth; pick VOO for a balanced, long-term core holding.

Table of Content

ETF Issuers & Investment Objective

When comparing VUG and VOO, it’s essential to start with the issuer behind both ETFs: Vanguard, a global leader in low-cost index investing and one of the most trusted names in asset management.

Vanguard Growth Index Fund ETF (VUG)
Launched in January 2004, VUG was designed to give investors targeted exposure to large-cap U.S. growth stocks companies expected to expand earnings faster than the market average. The fund tracks the CRSP US Large Cap Growth Index, which screens and weights stocks based on growth characteristics such as earnings momentum, sales expansion, and valuation multiples. With a modest expense ratio of 0.04%, VUG delivers a high-conviction portfolio of innovative, forward-looking companies, especially those in technology, consumer discretionary, and communication services. It's tailored for investors with a long time horizon who are willing to accept higher volatility in exchange for potentially superior returns.

Vanguard S&P 500 ETF (VOO)
Introduced in September 2010, VOO offers low-cost, diversified exposure to the S&P 500 Index, which includes 500 of the largest publicly traded U.S. companies. With an even lower expense ratio of 0.03%, the fund mirrors the broad U.S. market, combining both growth and value stocks across all major sectors. VOO is designed to serve as a core building block in long-term portfolios, appealing to investors who want broad-market stability, strong liquidity, and consistent dividend income. Its structure makes it suitable for both passive investors and tactical allocators looking to match the market.

While both funds are issued by Vanguard and benefit from its scale and efficiency, VUG emphasizes concentrated growth, whereas VOO offers balanced, market-wide exposure.

Annual & Cumulative Returns

VUG has outperformed VOO across most long-term periods, although short-term results tell a different story. Year-to-date in 2025, VOO leads slightly with +1.84% versus VUG’s +1.36%, suggesting the market has temporarily favored more balanced portfolios. However, over the 1-year and 3-year horizons, VUG clearly pulls ahead delivering +19.09% and +22.71% returns, respectively, compared to VOO’s +13.86% and +16.94%. Even over 10 years, VUG maintains a +2.44% edge, driven by its focus on high-growth sectors like technology. The data underscores how growth-oriented investing has historically outpaced broader market exposure when held over longer timeframes.

Risk Metrics

VUG’s impressive returns come at the cost of greater volatility. Its 1-year volatility stands at 15.27%, compared to VOO’s more conservative 11.44%, while the 3-year volatility rises to 20.17% for VUG versus 16.39% for VOO. Despite this higher risk, VUG’s 3-year Sharpe ratio is 0.59 better than VOO’s 0.50 indicating stronger risk-adjusted performance. Investors willing to endure short-term swings have been rewarded over time, which is consistent with the behavior of growth-heavy portfolios.

Explanation:

• Volatility reflects how much the price moves over time higher volatility means more frequent or larger price swings.
• Sharpe Ratio measures risk-adjusted returns: how much return you get for each unit of risk. Higher is better.

Dividend Yield & Growth

VOO offers significantly higher income potential, making it more appealing to dividend-focused investors. With a dividend yield of approximately 1.54%, VOO delivers more than double the income of VUG, which yields just 0.59%. This difference stems from the nature of the underlying companies: VOO includes mature, dividend-paying sectors like financials and healthcare, while VUG prioritizes fast-growing firms that typically reinvest profits instead of distributing them. Both ETFs are assumed to pay quarterly dividends, although VUG doesn’t formally disclose its frequency.

Explanation:

• Dividend Yield is the percentage of the fund's current price that is paid out annually as dividends.

Fees & Liquidity

Both VUG and VOO are extremely cost-efficient, but VOO retains a marginal lead. It has a lower expense ratio (0.03%) compared to VUG’s 0.04%, which can add up over time for long-term investors. Bid-ask spreads for both are tight at around 0.02%, ensuring minimal trading slippage. However, VOO boasts greater trading volume and liquidity, which is particularly beneficial for institutional investors or those executing large orders.

Explanation:

• Expense Ratio is the annual fee taken by the fund manager, expressed as a % of your investment.
• Bid-Ask Spread is the difference between the buying and selling price. Smaller spreads mean lower transaction costs.

ETF Composition: Asset Classes

The two ETFs are nearly identical in structure, with VOO holding 99.31% U.S. equities and VUG slightly higher at 99.57%. Non-U.S. stocks account for a minimal share in both, making them highly concentrated in the U.S. market. VOO holds a marginally higher international allocation (0.51%) compared to VUG’s 0.27%. Cash holdings are minimal for each, and neither fund includes bonds. For investors seeking global exposure, neither fund offers meaningful diversification beyond the U.S. equity market.

Regional Allocation

VUG is nearly a pure-play on U.S. equities, with 99.94% of its portfolio invested in North American companies. VOO is slightly more diversified, with 0.43% exposure to developed Europe and minor allocations to other regions. However, even VOO remains overwhelmingly domestic. This table highlights the concentration risk inherent in growth-focused U.S. equity ETFs, which may perform differently when U.S. markets underperform globally.

Sector Weights

Sector allocation is where VUG and VOO diverge most sharply. VUG allocates almost 50% of its portfolio to technology, compared to 31.7% for VOO. It also favors consumer cyclical and communication services stocks, reflecting a clear growth tilt. VOO, on the other hand, maintains more balance across defensive sectors like healthcare, consumer staples, and financials. Investors in VUG are taking on higher sector concentration, which can lead to both amplified gains and steeper losses, depending on market cycles.

Top 10 Holdings

Both ETFs hold many of the same top names, but VUG is more concentrated in its largest positions. For instance, Apple makes up 11.6% of VUG’s assets compared to 6.75% in VOO, and Microsoft and Nvidia are also weighted significantly higher. Berkshire Hathaway appears in VOO but is excluded from VUG due to its value orientation. This concentration in VUG magnifies performance potential, but also increases risk if any of the top names falter.

Valuation & Growth Metrics

Valuation Ratios

VUG trades at significantly higher valuation multiples than VOO. Its forward P/E ratio is 28.48 versus VOO’s 20.99, and its price/book and price/sales ratios are more than double. These premiums reflect the market’s confidence in VUG’s underlying companies to deliver robust future growth. However, higher valuations can mean higher sensitivity to earnings disappointments, making VUG more volatile during periods of market uncertainty.

Explanation:

• P/E Ratio = Price divided by earnings. Indicates how expensive a fund is relative to profits.
• Price/Book = Price vs book value (assets minus liabilities).
• Price/Sales = Price relative to total revenue.
• Price/Cash Flow = Price relative to how much cash the companies generate.

Growth Expectations

VUG dominates in every growth metric, which is exactly what it’s designed to do. Long-term projected earnings growth for VUG sits at 10.79%, compared to 9.91% for VOO. The historical earnings growth gap is even wider: 21.78% for VUG vs. just 9.31% for VOO. Sales, cash flow, and book value growth follow a similar pattern. These differences explain why VUG commands higher valuations and why it may appeal more to long-term investors seeking aggressive capital appreciation.

Which ETF Fits Your Portfolio - VUG vs VOO?

Choosing between VUG and VOO ultimately comes down to your investment goals, time horizon, and risk tolerance.

If you're seeking broad exposure to the U.S. economy with a diversified mix of sectors, VOO is the more balanced choice. It mirrors the S&P 500, includes both growth and value stocks, and delivers consistent returns with lower volatility. It's also slightly cheaper and more liquid, making it ideal for cost-conscious, long-term investors, especially those looking for a core portfolio holding or dependable dividend income.

On the other hand, VUG is tailored for investors with a higher risk appetite who want to maximize long-term growth potential. Its concentrated focus on technology and innovative sectors has historically led to superior returns over extended periods, though with sharper drawdowns along the way. Younger investors, those with longer time horizons, or anyone seeking aggressive capital appreciation may find VUG’s growth-focused strategy more aligned with their goals.

In short, VOO suits those who value stability and diversification, while VUG caters to those willing to embrace more volatility in exchange for potentially higher returns. You may even choose to hold both using VOO as a foundation and layering VUG on top for growth amplification.